Change valuation methodology; upgrade from Sell to Buy

􀂄 Our 2008 earnings forecast is 33% below consensus
We lower our 2008 earnings forecast 38% to Rmb1.9bn, which is 33% below
Bloomberg consensus, to factor in a higher inventory write-down of around
Rmb1.0bn. We note Maanshan was an exception, in that unlike other steelmakers it
did not incur an inventory write-down in Q308. Thus we believe there is potential
downside risk.

􀂄 We raise our ASP assumption but cut our output forecast for 2009/10

􀂄 Risks of steel ASP and raw material costs

􀂄 Valuation: upgrade to Buy, raise price target from Rmb2.26 to Rmb4.12

[此贴子已经被作者于2009-2-4 13:35:23编辑过]